BOJ chief expects no spike in long-term Japan interest rates

AYLESBURY, England May 11 Japanese long-term
interest rates should not shoot higher as a result of money
flowing out of government bonds, Bank of Japan Governor Haruhiko
Kuroda said on Saturday.

Kuroda added, however, that it would be natural for
long-term rates to rise over time if Japan meets its goal of
pushing inflation up towards two percent.

He said a shift in funds from Japanese government bonds to
stocks and into lending was already taking place but that the
BOJ was increasing its balance of JGB holdings at an annual pace
of 50 trillion yen.

"The BOJ dealt with short-term volatility in bond prices by
adjusting its market operations," Kuroda told reporters after a
two-day meeting of G7 finance officials.

"I do not expect a sudden spike in long-term bond yields. In
the long-run, if the economy recovers and inflation heads
towards two percent, we might see nominal interest rates rise
but that's natural."

Finance Minister Taro Aso said the G7 had levelled no
criticism at Japan's monetary policy which has weakened the yen
sharply.